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The City watchdog issued Kaupthing Singer and Friedlander, a UK-based subsidiary of the Icelandic banking group Kaupthing Bank Hf, a final notice for breaching one of the FSA’s regulatory principles between 29 September 2008 and 2 October 2008.

KSFL breached FSA rules because it failed to “consider promptly and properly” whether liquidity stresses in parent company KBHf in Iceland would have a detrimental effect on its own liquidity position.

The final notice outlines how KSFL did not “give proper consideration to, or properly monitor, a special financing arrangement with its parent company in Iceland, under which it could draw up to £1bn at short notice”.

The FSA was responsible for regulating Kaupthing Singer & Friedlander before its Icelandic parent company went bust and the UK subsidiary was placed into administration on 8 October 2008.

After KSFL was placed into administration, the FSA started an investigation into the conduct of KSFL and its senior management.

The regulator said KSFL’s failings were serious as they occurred at a critical period for the financial markets and when the FSA had asked banks to be transparent about their liquidity.

As a result of the investigation, a former non-executive chairman, non-executive director and chief executive of KSFL were banned from holding “significant influence functions” requiring FSA approval at UK authorised firms until October 2013.

The FSA has not made any findings of regulatory breach against the individuals and they have not made any admissions.